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Wednesday, 9 February 2005
Page: 33

Senator ELLISON (Minister for Justice and Customs) (11:53 AM) —That is the issue, and that is the very reason why we are seeking to strengthen bankruptcy anti-avoidance provisions. I have a copy of the discussion paper here and I think I can touch on some of the comments made by Senator Ludwig. It states very clearly at the outset:

The purpose of this paper is to seek your views on options to amend the Bankruptcy Act 1966 (the Act) to address concerns about some high income earners using bankruptcy to avoid paying their debts. The Government remains determined to ensure bankrupts who actively seek to avoid paying their debts are brought to task without causing unintended consequences for legitimate asset protection arrangements.

Further down, it refers to the task force that Senator Ludwig mentioned. It says:

The Taskforce identified the problem of a small but significant number of high-income debtors, typically high earning fee-for-service professionals, who use bankruptcy to avoid paying their taxation and other debts. These debtors have the ability to pay their debts but instead fund a lifestyle made possible only through the non-payment of debts and the build up of assets in the names of related parties.

That is on the first page of the discussion paper, and it is absolutely on point in relation to anti-avoidance. But I stress again that I believe the discussion paper, which goes for five pages, provides a thorough basis for dealing with this complex area in a targeted fashion so that we can come up with comprehensive amendments which will remedy those problems we have identified.

Senator Ludwig has said that the amendment is more of an interim measure, and he accepts that it is not comprehensive. The government’s view is that rather than do it piece by piece, which could result in unintended consequences, let us do it though a process of a discussion paper on point—a forum. At the back of the discussion paper it says to contact David Bergman, adviser, Policy and Legislation, Insolvency and Trustee Service Australia—GPO Box 8281 Canberra, ACT 2601 or email at david.bergman@itsa.—by 31 March. That is a public consultation process. It is one which is transparent.

At the conclusion of that, ITSA will determine what appropriate amendments are necessary. A bill will then be put to the parliament. There will no doubt be Senate scrutiny through the committee process and House of Representatives scrutiny through their committee process, as we have seen with this bill. It will be put on the crucible, so to speak. I certainly reject that this is not a transparent process. It is one to flush out the problems in a very complex area. We realised this when we put out our bill in this more general application. We realise that the amendments we are proposing today are ones which were highly desirable and much supported. Let us go ahead with those. But on the difficult area, to ensure that we get it right, let us have a discussion paper and bring it back as a bill which deals with anti-avoidance provisions per se. The tenor of this document makes no bones about it: the government is determined to address those anti-avoidance practices. I have a copy here should senators want one.

Senator Murray —Has that been tabled?

Senator ELLISON —I will gladly table it.